Real estate is a lucrative investment opportunity that has underpinned some of the largest private wealth collections in the United States for generations. Investing in real estate was once a high-value asset that only the wealthiest investors could take part in, but this is no longer the reality.
Investors of all stripes are beginning to get into the investment property market as a fantastic investment opportunity to create additional capital streams for their savings and retirement portfolio. With that in mind, where should you begin when it comes to investing in the market or diversifying your existing portfolio?
Start with REIT funds.
A REIT (or Real Estate Investment Trust) is a stock market mutual fund that any investor can buy into. These funds are formed of real estate properties and are a great first step for those looking to get into the real estate game. Tracking the market with a REIT fund that you trust (and there are thousands of unique REITs on the market for you to choose from) is a great way to learn the ins and outs of the property market. Following along with the mix of type and location that makes up the fund you’ve selected is the perfect way to tack on the returns without risking capital while you are still learning to find success. Utilizing this model to understand what sinks and raises an individual property by first learning the market will help you to succeed when you take your first steps into the physical market for yourself. There are a number of prospective investment platforms that can lay out the pros and cons of a real estate investment, from Yieldstreet to others on the market. You really can’t go wrong with a REIT or similar real estate fund. For more on Yieldstreet, checkout Yieldstreet complaints, and reviews for full-spectrum analysis of the available Yieldstreet offerings and funds.
Move into the real property market.
Once you’ve collected all the requisite information in order to make intelligent market buys as an individual real estate investor, it’s time to approach private money lenders for real estate and make your first purchase. Investing in the real estate market is different from stocks or bonds in that investors double as borrowers for at least their first few purchases. As you grow your footprint, you will want to rely on lenders to fund these initial purchases, whether you’re buying residential properties or commercial properties. Once you’ve netted a healthy profit you might consider a cash buyer, but this is far down the road. The great part about real estate investing is that you can leverage the collateral from another property or other collateral assets to lower your interest rate on the mortgage as well. This helps keep operating costs low during your advance into this new marketplace.
Targeting properties comes in two forms when you make this leap. Many real estate investors target foreclosures and price reduced homes as flip projects, in order to fix them up and resell them for a profit. Others will want to purchase homes that come in a more ‘livable’ state, making minor renovations to the property in order to rent the home to a new set of tenants for monthly income. Either way, real estate investors benefit from a series of tools designed to help choose properties wisely. Search the public records for the property first before making any moves on a home that you are considering. This will show you whether there is old water damage or any structural faults with the home that will need to be addressed before you can profit off of the home. This way, you can be sure that you are eying homes that stand to deliver profits back to your bank account as quickly as possible and won’t require major upgrades before you can even think about a return on investment.
Rentals Versus Flippers
Real estate investors have to make the decision to target one type of home or the other based on their strengths. Flipper homes will typically cost less upfront as a result of their general state of disrepair; however, these homes will obviously need more capital infusion to get them market-ready. A rental property, on the other hand, is a great way to strike a balance between renovations and turnkey solutions.
A flipper home is one that you can often purchase for a steal. These homes may be in less than desirable geographic locations or have gone for years without proper maintenance on the home. However, with a few renovations, these homes make for great capital growth. The markup on a home in the New York or Houston metro area is often a major draw for real estate investors and offers a unique alternative asset for those looking to diversify a portfolio made up of all stock or bullion holdings thus far.
Rental properties are the other option. With a rental property, you will see a trickle of monthly income come into your account, as opposed to the lump sum payout enjoyed by a flipper home. However, these investments are typically less capital intensive up front and come with a bit less front-loaded risk.
The real estate market is a great space for any investor looking to supercharge their portfolio, so it’s a good idea to find some great opportunities in your area and make the jump now.